The Corporate Pychopaths Theory of the Global Financial Crisis

Thu, 12 Jan 2012 10:43:00 GMT

This paper by Clive R Boddy has attracted a lot of attention in recent days:

It took a relatively obscure former British academic to propagate a theory of the financial crisis that would confirm what many people suspected all along: The “corporate psychopaths” at the helm of our financial institutions are to blame.

Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”

As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”

My companion, a senior UK investment banker and I, are discussing the most successful banking types we know and what makes them tick. I argue that they often conform to the characteristics displayed by social psychopaths. To my surprise, my friend agrees.

He then makes an astonishing confession: "At one major investment bank for which I worked, we used psychometric testing to recruit social psychopaths because their characteristics exactly suited them to senior corporate finance roles."

Boddy also points out that in these high-stakes actions, Corporate Psychopaths richly reward themselves and their political contacts as the economy is destroyed and more normal productive citizens lose their share of the American dream. Few begrudge Bill Gates, for example, his success because Gates has enriched millions of lives and pocketbooks. But Fannie Mae, Freddie Mac, and Countrywide were corrupt and corrupting, and destroyed rather than built.

So, we have a narrow 1% of the population that is highly intelligent, very ambitious, and devoid of moral values operating in a political environment where money flows like water with no accountability. This is the environment in which the national debt has gone from essentially nowhere to over $15 trillion in less than fifty years, since the start of the Great(?) Society programs.